Consolidated Construction Consortium Stock Split approval

The Consolidated Construction Consortium Ltd (CCCL) board has approved the stock split (sub division of shares) of the face value of Rs. 10 each to Rs. 2 each, that is 1:5 ratio.
Consequent to the shareholders approval, the current paid-up share capital of the company will be Rs. 36,95,54,450 consisting of 18,47,77,225 equity shares of Rs. 2 each. This was approved at the extraordinary general meeting held on 27 January 2010.

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Could this trigger second round of recession?

US Federal Reserve, the most important monetary body in the world concluded its two day meeting yesterday. No one was expecting any surprises on the interest rate front. And the script unraveled as per expectations. The Fed maintained interest rates at near zero levels and vowed to do so for an extended period of time. But there was another important development. The Fed signaled its intention of unwinding the massive monetary stimulus that it had undertaken during the peak of the crisis.

In other words, it restated its intention to stop buying US$ 1.25 trillion worth of mortgage backed securities in March. Now, this is likely to be a watershed event in global financial history. It should be remembered that stimulus unwinding of this magnitude has never taken place in history before. And hence, the US Fed may not be quite aware of how to go about it. The Fed has certainly not given any indications of how or when it plans to start pulling back the enormous money it has pumped into the economy over the last two years.

But there is every chance that a mistake could be made. The money involved is huge and the economic recovery still fragile. So, is the transition going to be smooth or will the world's largest economy head into another recession on account of the US Fed not injecting any more liquidity in the system? Our bet is more on the latter than the former. And if it indeed does happen then what happens to Indian stocks? Well, there could be impact no doubt. But it will be restricted to Dalal Street and not impact Main Street a great deal. In other words, it could turn out to be a good opportunity to invest in the Indian long term growth story.

Gold is the ultimate asset bubble'

George Soros is one of the most successful modern day speculators. He has amassed most of his wealth by identifying bubbles and participating in them until they become ripe for bursting. Thus, it can be concluded quite safely that he indeed knows a thing or two more about bubbles than the average Joe out there. Hence, we were all ears when Soros recently proclaimed that gold is the ultimate asset bubble. Gold has certainly appreciated in the region of 40% in 2009. And interest rates were also quite low in 2009. These two conditions have to be met for an asset class to be declared a bubble. And indeed they were met in the case of gold.

However, it should be noted that on a long term basis, gold has still not reached the inflation adjusted high of 1980. By some estimates, it will have to double from here to reach those levels. Moreover, the inflation adjusted high mostly takes into account a trend line inflation. Not the type that is staring us in the face in view of the enormous money printing that is being done. Now, there is no doubt Soros has said that Gold is the ultimate bubble. But even he has not mentioned whether the bubble is about to burst or will continue to make new highs. Thus, there may not be a big gold price correction at all.

We are of the view that there will be pullbacks along the way. Some big and some small. But as long as central banks, most notably the US Fed continue to print money, Gold will be an important asset class to have in one's portfolio. Like we always mention, please do not go overboard with it.

IVRCL Bonus Issue

IVRCL Infrastructures and Projects Limited (IVRCL) on Thursday declared bonus issue of equity shares in the ratio of 1:1 capitalising Rs 26.70 crore out of its free reserves. IVRCL recorded a turnover of Rs 3613 crore for the nine month period ending December 2009 against Rs 3312 crore for the same period last year, the company said.

SREI Infra bonus issue approved

SREI Infra board has approved a bonus issue of four shares for every five shares held in the company, it said in a statement to the stock exchange. It’s the ratio of 5:4.

Crompton Greaves bonus issue approved

Crompton Greaves jumped 6.72% as net profit rose 60% to Rs 135.43 crore on a 14% increase in total income to Rs 1240.47 crore in Q3 December 2009 over Q3 December 2008. The result was announced during trading hours today, 28 January 2010.
Meanwhile, the company’s board recommended issuing three bonus shares for every four held (4:1). This is Crompton Greaves’ third bonus issue. Earlier, the company had issued 1:1 bonus in January 1990 and a 2:5 bonus in December 2006.

US Fed Chairman Bernanke gets second term

Warren Buffett and Nouriel Roubini have said that this man saved the US economy from going to the dogs. Others like Marc Faber have been against his policies. His critics had a strong case against him - of postponing the pain for the US economy into the future. But most of them still feared that his rejection as the head of US central bank for a second term could make the Fed's policies worse, not better.

So there you are. Ben Bernanke, the Chairman of the US Federal Reserve, has been confirmed for a second term by the US Congress. This vindicates the stand taken by his supporters. They thought that the US economy was badly injured during the crisis and required radical surgery. Hence, it made no sense to change the surgeon now that the patient was starting to recover.

With Bernanke back in the hot seat, and for the next four years, it would be interesting to see how he acts to sustain growth for the US economy. After all, now is the time that he and his team would need to begin reversing a record monetary expansion. And this without undercutting the fledgling recovery in the world's biggest economy

Auto sector to remain robust

We all know what a cracking year 2009 turned out to be for the Indian auto sector. Pickup in economic growth and the government stimulus program emerged as the key demand boosters. So, will the sector be able to do an encore in 2010? Indeed, if a leading daily is to be believed. The Indian auto sector is likely to witness an overall growth of 10%-12% in the current calendar year. Passenger vehicles are expected to log in a growth of 12%-14%, while commercial vehicles are expected to grow at a lower rate of 5%-6%. It should be noted that growth for April-December period for these two segments has come in a lot higher at 25% and 23% respectively on a YoY basis. And hence, to that extent there could be some slowdown in growth. Furthermore, not all segments are expected to rake in similar growth rates, especially amongst CVs. It is the light commercial vehicles and high tonnage vehicles that are likely to steal the show.

So, with a robust growth in volumes, is the performance on the stock markets expected to follow suit? We do not think so. For one, the fight for market share is going to intensify, thus affecting profitability and secondly, the stock prices have run up to such an extent that the upside in volumes seem to be already reflected in the share prices. So, while Main Street will continue to chug along nicely as far as the auto sector is concerned, Dalal Street may just not follow suit.

RBI hikes CRR by 0.75%

Speaking of central banks, the Reserve Bank of India (RBI) released its third quarter review of the Monetary Policy today. It has hiked the cash reserve ratio (CRR), the ratio at which banks maintain cash with RBI (as a percentage of their deposits) by 0.75%. It is meant to suck out liquidity to the tune of Rs 360 bn. Interesting to note that the RBI believes that its monetary measures will be of little consequence unless the government mends its ways. In our view, this watershed event marks the bottoming out of the easy liquidity scenario which unfolded since late 2008. However, the reversal of accommodative monetary stance cannot be effective unless there is also a roll back of government borrowing.

Obama fears India's rise.

No matter what the hype and the pedigree; most politicians know how to appease their voters when pushed to a corner. In recent times, US president Barack Obama has faced political setbacks and increasing criticism over his leadership. Hence, the content of his annual State of the Union address does not come as a surprise.

The key takeaway for us here in India is his statement, "To encourage ... businesses to stay within our borders, it is time to finally slash the tax breaks for companies that ship our jobs overseas, and give those tax breaks to companies that create jobs right here in the United States of America." That clearly has implications for the Indian IT industry. Little wonder then, the top losers among the index heavyweights in India today were from the software pack. So far, the mood among the Indian software giants seems optimistic. US tax breaks aside, American companies will continue to need cost effective services. The key question is whether Indian service providers can remain competitive even after taking into account the higher taxes their clients must pay. In our view, Indian IT companies will still get business. They continue to provide compelling value. They have also taken steps like increasing their presence overseas and hiring locals there.

On a broader note, Obama also noted that countries like India were "not standing still... They are putting more emphasis on math and science. They're rebuilding their infrastructure. They're making serious investments in clear energy because they want those jobs." In our view, this is an admission of the progress we have made in the past several years. There is no mistaking that we have years of catching up to do. But we can take heart that things are moving in the right direction.

IIP for Nov at 11.7% Vs 2.5% (YoY)

IIP for Nov at 11.7% Vs 2.5% (YoY), Vs 10.3% (MoM); CNBC-TV18 poll saw Nov IIP at 10.2%; Capital Goods growth at 12.2% Vs 0.5% (YoY)
November IIP stood at 11.7% Vs 2.5% (YoY), Vs 10.3% (MoM). CNBC-TV18 poll saw November IIP at 10.2%. October IIP remained unchanged at 10.3%.
November Manufacturing Sector growth stood at 12.7% Vs 2.7% (YoY). Basic Goods growth stood at 6% Vs 2.2% (YoY). Capital Goods growth stood at 12.2% Vs 0.5% (YoY). Mining Sector growth stood at 10% Vs 0.7% (YoY). Electricity Sector growth stood at 3.3% Vs 2.6% (YoY). Intermediate Goods growth stood at 19.4% Vs -3.9% (YoY). Consumer Goods growth stood at 11.1% vs 9.4% (YoY). Consumer Durable Goods growth stood at 37.3% Vs 0.3% (YoY).

Infinite Computer Solutions IPO subscribe 2.85 times

The initial public offering (IPO) of Infinite Computer Solutions (India), a global service provider of Infrastructure Management, Intellectual Property (IP) leveraged solutions and IT services, focused on the Telecom, Media, Energy, Manufacturing, and Healthcare industries, has been subscribed to approximately around 2.84 times (Source: NSE and BSE website) on Day 2 (January 12). As of 4 pm on January 12, 2010, Total Bids Received was 27,861,480 as against the Total Issue Size of 9,777,550.
Infinite entered the capital market on January 11, 2010, with an Initial Public Offering of 11.5030 million Equity Shares of Rs 10 each for cash at a price to be decided through a 100% book-building process. The price band has been fixed between Rs. 155 and Rs. 165 per Equity Share. The Issue closes on January 13, 2010.
Nine anchor investors such as T. Rowe Price International Inc., Carlson Fund India, Lloyd George Investment Management (Bermuda) Limited A/C L. G. India Fund and India Plus Fund, Alden Global (Mauritius) Ltd. Credit Suisse (Singapore) Ltd., BATSPL A/C Bharti Axa Equity Fund, Reliance Capital Trustee Co. Ltd. A/C Reliance Regular Savings Fund – Balanced Option and Citigroup Global Markets Mauritius Pvt. Ltd. have been allocated 1,725,450 shares at a price of Rs 165 per equity share (upper end) on January 8, 2010.


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Axis IT&T Board approves Rights Issue

Axis IT&T Board approves Rights Issue to raise upto Rs 50 crores. Axis-IT&T Ltd has announced that the Board of Directors of the Company at its meeting held on January 12, 2010, has been decided to raise further capital by issue of Equity Shares on rights basis for an amount upto Rs. 50 (fifty) crores, subject to the necessary approvals, if any. The Board has also constituted a Committee and delegated the necessary powers to the Committee to decide about the size, timing, basis of offer, premium and other modalities of the proposed rights issue.

Sanraa Media Board approves 5:4 Bonus Issue

Sanraa Media had made an bonus issue announcement on 4th Jan. It has announced that the Company is marching into its 15th Year of incorporation. To mark this entry into the 15th year, the board has Considered and proposed, subject to the approval of the Shareholders and other statutory authorities, issue of Bonus Shares in the ratio of five equity shares of the Company of Re 1/- each for every four equity shares held by the Shareholders of the Company as on the Record Date to be fixed later for this purpose.

Record date - Winsome Yarns Stock Split

Winsome Yarns has fixed 22 January 2010 as the record date for sub-division of denomination of paid up equity shares from Rs. 10 each to Re. 1 each.

Atco Corporation hits Upper Circuit on Stock Split plan

Atco Corporation was locked at 5% upper circuit at Rs 356.85 on BSE, after the company said its board will meet on 19 January 2010 to consider stock-split. The company announced the board meet after market hours on Monday, 11 January 2010. The stock opened with an upward gap, surging by the maximum 5% daily circuit and remained locked at the 5% level so far in the day. The stock hit a lifetime high of Rs 389.95 on 20 November 2009 and a 52-week low of Rs 50 on 14 July 2009. The company is engaged in production and sale of bottled drinking water/mineral water. The company markets its bottled mineral water under ‘Brilliant’ brand.

Murli Industries Stock Split Plan

Murli Industries surged around 5% on BSE, after the company said its board will meet on 18 January 2010 to consider stock-split. The company announced the board meet after market hours on Monday, 11 January 2010. The company is engaged in manufacturing and marketing paper. The company also manufactures and markets soya de-oiled cake, refined edible oil and paper products like duplex, newsprint, printing paper, cream wove, map litho paper and copier. The company operates in nine segments namely: solvent extraction unit, duplex paper, newsprint, writing & printing, power, pulp and cement.

Sterlite Technologies Bonus Issue and Stock Split plan

Sterlite Technologies jumped around 10% on BSE, after the company said its board will meet on 18 January 2010 to consider issue of bonus shares and stock split. The company announced the board meet after market hours on Monday, 11 January 2010. Sterlite Technologies provides transmission solutions for telecom and power sectors.